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MONTREAL—U.S. prosecutors have charged a former executive with Valeant Pharmaceuticals and the head of a defunct U.S. mail-order pharmacy with conspiring to defraud the Quebec-based drug giant through a multimillion-dollar kickback scheme.

The U.S. Attorney’s Office for the Southern District of New York said Thursday that Gary Tanner, 39, a former executive at Valeant Pharmaceuticals International Inc., and Andrew Davenport, 48, the former CEO of Philidor Rx Services, were arrested.

The men each face four charges, including wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering.

“Their alleged kickback scheme illegally converted Valeant shareholder money into their own personal nest eggs,” U.S. attorney Preet Bharara said in a statement. “As alleged, while purporting to be arms-length business counterparts, the two men were, in fact, partners in crime.”

Investigators allege that both accused conspired to obtain tens of millions of dollars from Valeant and split the proceeds, according to a 28-page complaint signed by FBI special agent Ryan Redel.

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In the document, Redel alleges that Davenport paid Tanner about $10 million ($14 million Cdn.) in secret kickbacks. The complaint says that money was laundered through shell companies and came from a $40 million payout Tanner received from Valeant.

The men are alleged to have used the proceeds to buy second homes, pay debts and make investments, and in one case, Davenport spent $50,000 for the installation of a custom wine cellar, according to the complaint.

The accusations have not been proven.

Tanner’s lawyer said his client was innocent and regularly communicated with his Valeant bosses about his efforts to grow the company.

“Today he has been charged with a crime for doing his job,” Howard Shapiro wrote in an email. “We will demonstrate his innocence at trial.”

Davenport’s lawyer could not immediately be reached for comment.

The complaint says the two men exchanged emails and in one exchange, Davenport evoked images from the old Western classic, “Butch Cassidy and the Sundance Kid,” by talking about how they would “ride into the sunset” together.

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At a news conference in New York, Bharara said that more arrests are possible as the investigation continues.

“As of today, the game is up and they will not be riding off into the sunset together,” Bharara said.

Valeant was once Canada’s largest firm by market capitalization. But its reputation has taken a beating in the last year since its affiliation with Philidor, a Pennsylvania-based mail-order pharmacy that mainly distributed some of Valeant’s specialty drugs, was disclosed.

The company cut its ties with Philidor in October of 2015 and three months later, Philidor ceased operations.

In a statement, Valeant said it learned Thursday that a criminal complaint was filed in relation to Philidor and that it continues to co-operate with all relevant authorities in the matter. The Laval, Que.-based firm said Tanner was no longer an employee as of Sept. 13, 2015.

In the complaint against Tanner and Davenport, it’s alleged that the two secretly worked together to promote Philidor’s business by using Tanner’s access to senior Valeant executives to push for the adoption of a purchase option agreement that cost Valeant and its shareholders nearly $300 million.

Tanner was asked by executives at Valeant whether he had any financial interest in Philidor and he denied that he did, according to the complaint. He also signed Valeant’s code of conduct that prohibited any business or financial relationships with suppliers, customers or competitors, the document says.

The complaint says that even after suspicions were raised among Valeant executives, including the chief compliance officer, Tanner promoted Philidor and resisted Valeant’s efforts to diversify through partnering with other specialty pharmacies.

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